Presidential bailout for states

SIR: The recently announced presidential bailout approved by President Muhammadu Buhari for states owing workers months of unpaid salaries will, no doubt, be a welcome development to concerned workers across the country and, indeed, many of the affected states.

An integral part of the bailout strategy as announced by government is for the federal and state governments to share $2.1 billion (about N497 billion) sourced from recent LNG proceeds to the federation account. Equally, the federal government has directed the Central Bank of Nigeria, CBN, to arrange a special intervention fund that will offer steady financing to the states. The package, which is between N250 billion and N300 billion, is to serve as a soft loan available to states to access to settle arrears of salaries.

Additionally, the President has approved a debt reprieve plan devised by the Debt Management Office, which will help states to streamline their commercial loans which is presently put at around N660 billion, and extend the life span of such loans while reducing their debt-servicing expenditures. Another part of the plan is to free up more money currently being used for debt servicing by guaranteing the elongation of the loans in the benefit of the states.

To those in support of the move, it is the best option available, for now given the parlous state of the nation’s economy occasioned by dwindling global price of oil. However, those who are against the move hinged their stand on the fact that it would further entrench corruption in the system. They argued that, in as much as it is true that the national economy is experiencing a downward trend, most of the states actually compounded the situation through financial recklessness.

It is essential to point out that in a troubled economy like ours, government bailout is one of the economic measures that could rescue the polity from a possible or a definite collapse. It is customary, even in advanced democracies, for government to roll out bailout strategies in order to preserve democratic institutions and provide soccour to the downtrodden.

The snag, nonetheless, is for how long will the federal government continue to bailout the states, especially if the economy doesn’t record a significant improvement as soon as expected? This is where the states need to be more creative and inward looking in shoving up their Internally Generated Revenue, IGR, base. It is better not to have states than to have states that are not economically buoyant. Such would only serve as a huge burden on the country.

Creative strategies must be evolved to drag more taxable citizens into the tax net. Governments all over the world run on the taxes paid by the citizens, we cannot be an exception. The cost of governance must be reasonably pruned down. There is no point keeping arrays of needless aides if the economy cannot afford such. Our leaders need to start leading by example. All meaningless extravagant tendencies that could plunge the states and, indeed, the nation into deeper economic mess must be shunned. Transparency and accountability must become the order of the day in all government establishments.

It is equally fundamental for both the federal and State governments to address the issue of over bloated civil service. If it is true, as it is being alleged, that some MDAs keep more than the required number of staff that is actually needed, efforts must be made to deal with such. It is particularly undesirable for any government to spend the bulk of its resources in paying the wages of a lethargic and parasitic workforce. More importantly, the Federal Government should step up efforts to improve the national economy. One way of doing this is to develop the non-oil sector. Our current national economic predicament is a direct result of the failure of the federal government to diversify the country’s economy. Succeeding administrations has for long been paying lip services to the development of the non-oil sector. This trend must change.